Chinese Shadow Bankers Using Crypto Casinos to Launder Money, TRM Labs Warns

Chinese underground financiers are finding new ways to move illicit funds across borders—and blockchain casinos are at the center of it. A fresh report from blockchain intelligence firm TRM Labs reveals that “shadow bankers” are increasingly exploiting online and cryptocurrency-based casinos to wash money tied to organized crime, drug trafficking, and other illegal activities.

Good to Know

• The practice is linked to fei qian (“flying money”), a centuries-old underground banking system now modernized with crypto.
• Criminal brokers often charge less than 2% commission while offering near-instant transfers.
• Law enforcement is adapting by tracking illicit funds through blockchain analysis.

TRM Labs says the trend accelerated during the Covid-19 lockdowns, when physical casinos shut their doors and gambling shifted online. Criminal networks followed the industry’s pivot, creating a global ecosystem that allows them to cycle money through casino accounts, betting credits, and crypto wallets—sidestepping international wire transfers that might trigger anti-money laundering alerts.

According to the report, these networks “fly under the radar” but still leave digital traces. Law enforcement has found that the same features that make cryptocurrency attractive to criminals—speed, global reach, and pseudonymity—can also help investigators trace and seize illegal assets.

A July study by the Foreign Affairs Forum highlighted just how efficient these illicit brokers have become. They have “significantly outpaced traditional money laundering groups” by delivering rapid cross-border transfers with minimal fees, often making the cash “virtually untraceable.” Analysts warn that if left unchecked, such activity could worsen drug epidemics, organized crime, and tax evasion.

TRM Labs argues that combating the problem requires “diligent blockchain analysis, interagency collaboration and bold strategies—including going on the offensive in cyberspace.” The report suggests that targeted cyber operations could expose and dismantle portions of these shadow networks, disrupting the criminal pipelines they depend on.

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